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Last
fortnight when Richard Branson, 54, the flamboyant
Chairman of the estimated $8 billion-plus (Rs 35,200 crore-plus)
Virgin Group, was seen around Mumbai lifting women in the air,
riding the local train with the ubiquitous dabbawallas and attempting
a go at the Queen's game, the average Mumbaikar might have wondered:
"Who is this weirdo?" Those familiar with Branson's
antics, however, might have just nodded their head as if to say:
"He's at it again." After all, he's the man who successfully
launched the punk rock group Sex Pistols in the late 1970s at
a time when no other record company was willing to touch them
(perhaps because they wrote lyrics like "God save the queen,
she ain't no human being"); who successfully got arrested
twice in his career; and who recently got his jollies by sitting
through a hurricane that hit Necker Island (Branson's private
Virgin Island). "An awesome experience", is how he is
reported to have described it. In this interview with BT's
Brian Carvalho, Branson talked
about other less dangerous-not by much, though-challenges he's
faced over the past four decades during which he built the Virgin
Group into a billion-dollar empire, with over 200 diverse businesses.
Excerpts:
You have over 200 businesses on your plate.
How do you keep track of them?
We have grown from scratch into 200-250 businesses
around the world. I should think the top 10 businesses would be
contributing 50 per cent of our revenue, but these may be within
as many as 100 different companies. As I grow a business, I find
a managing director, give him a stake in the company, and tell
him he can run it as if it's his own company. I will tell him
that I will interfere as little as possible; if he needs my help,
he can call me up, but I try to give him the freedom to make mistakes
and make good things. We have a small central team of people-very
small-that can help on things like global tax issues or brand
issues or group buying issues. But generally speaking, we leave
people alone.
When do you feel it's time to interfere?
The most important thing for us at Virgin
is our reputation, both personal and business. Reputation is all
you've got in a sense. The brand is the most respected, either
#1 or #2 in Britain, and amongst the 20 most respected brands
on a global basis. We fight very hard to ensure that nothing is
done to damage that brand. If a company strayed, we would jump
in very quickly. We could even take the brand away, which we have
done once in the last 40 years. This was a company we didn't own,
selling gas and electricity. But generally speaking it's worked
well. I will travel the world a lot, I will help the companies
put themselves on the map around the world, I spend quite a lot
of my time on new ventures. For example, there's the space project-The
Virgin Galactic project-where I am plotting and planning things.
It's particularly such big projects that I spend a lot of time
on.
Is the time ripe for many of your ventures
to be flagged off in India?
If we had the time, and energy, most businesses
we started in the uk could work in India as it is today. Maybe
15 years ago, when it came to luxury health clubs, people might
have said you couldn't do it in India. Now, though, there certainly
would be a market for a number of Virgin Active Health Clubs in
India. The financial services industry, in every country, could
do with a shakeout, and India is no exception. The credit cards,
mobile phones, planes...
Your proposal for a low-cost airline foray
in the US pretty much coincides with plenty of action that's being
witnessed in this sector in India...
We're happy and willing to invest-rather I
am personally happy and willing to invest because I couldn't do
it with Virgin-in a domestic carrier. We're talking to people
who want to start up domestic carriers from scratch. We're talking
to one or two established players who want us to invest in their
businesses. And I suspect in the next few months, we'll make a
decision and get on with it, subject to government permission.
I have quite a lot of experience, having set up airlines in Australia,
the UK and Europe; we're setting up an airline in Nigeria, which
we are launching as the national airline of that country in two
months; we're setting up an airline in the us, which will be launched
by the end of the year. So, we have quite a lot of experience
in starting and building airlines, and we would love to bring
that experience to India-and the cash.
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| "We're talking to people (in India)
who want to start up domestic carriers from scratch. In the
next few months, we'll make a decision and get on with it" |
You have your critics who think it's a
bad idea to be launching a low-cost airline in America so late.
They may be right! But the big American carriers
had a meeting about six months ago, where the chairman of one
of the companies said that the industry is bad at the moment,
and the last thing we need is for Richard Branson to set up an
airline in America, which I must say I found most flattering when
I heard it. Yes, the industry is very bad in America, but it's
also very very badly run. The quality of American carriers, even
the international American carriers, is about the worst in the
world. Even the Eastern carriers beat American carriers hands
down, and for some reason, though America is quite renowned for
good quality in a lot of areas, when it comes to airlines they're
the worst. There are a couple of small airlines in America that
are very good. Southwest Airlines is very good, and an airline
called JetBlue is very good. But the rest of the American carriers
are real dross, and that's why I believe America is ripe for Virgin
territory because we love to go where people are not doing things
well, where we think we can do things better.
So by when can one expect the launch of
Virgin America?
We should be launching in six months; it has
been delayed-it's a bit like India; I can't just write out a cheque
out and get on with it-I've had to go through enormous regulatory
hurdles to get it all sorted. We believe we're nearly sorted,
and we believe we should be launching before the end of the year.
We have the financiers. The thing about the airline business is
that it is the most bizarre business: If I want to set up a chain
of cinemas anywhere in the world I can do it; if I want to set
up a financial services company anywhere in the world I can do
it; if I want to set up a hospital anywhere in the world I can
do it; if I want to set up record shops anywhere in the world
I can do it; if I want to set up a mobile phone company anywhere
in the world I can do it. Civil servants, for some reason, love
to cling to the idea of treating the airline industry different
from any other industry. There's no reason for it. The best thing
for the consumer is to free up the skies and let anybody fly anywhere
in the world, subject of course to safety and subject to the capability
of running an airline. We have fun trying to overcome those problems.
Your reality show, Rebel Billionaire,
was looked at as a counter to Donald Trump's The Apprentice, as
well as a blatant promo for the airline foray in America. Has
it served the purpose?
The Rebel Billionaire was good fun to make.
I think it was a good, entertaining TV show, very different from
Trump's show: Ours was partly business but more challenge-based-physical
challenge, and I had to participate in all of them (it was enjoyable
to do). We came after Trump; his programme definitely had more
viewers, it was more established. In America, Trump is better
known than I am, but we still got some millions of people watching
it every week and enjoying it. It definitely helped put Virgin
on the (US) map, and I hope it was a promo for our businesses,
but I don't think it was a blatant promo. I think my approach
to life is different from Trump's... the world's made up of a
lot of different people.
How much is breaking the rules and challenging
convention responsible for your success?
You've got to stand out from the crowd. If
you do things the way everybody else is doing them you're unlikely
to be successful. But you shouldn't be breaking convention just
for the sake of it. There should be a reason behind it, and it
should be something the public and the press believe in, and you've
got to deliver; you've got to create companies that people believe
in, and you've got to be sure that the people working with you
believe in it, so that they are willing to work day and night
to make it a success.
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| "If we had the time, and energy, most of
the businesses we started in the UK could work in India as
it is today... credit cards, mobile phones, planes..." |
You aren't a great believer in IQ tests...
That's because I was never good at them.
You also don't believe in poring over balance sheets and juggling
with numbers.
To give you an example, when we were thinking
of starting the airline, if I had got two lots of accounting firms,
one set of accountants could have done one set of figures that
could have told me that this airline is going to lose money; another
set of accountants could done another set of figures that could
have said we would make a lot of money-it all depends on the assumptions
you put in those figures. An alternative way (of deciding whether
to start up an airline) is this: I had flown on a lot of people's
airlines, I didn't like the experience, I felt I could create
an airline that people would want to fly on, and I felt if I could
get more people wanting to fly on my airline than on my rivals'
airlines, it would be likely to be profitable... so it is more
of a gut feeling, and fortunately it's generally worked out for
us... I am sure for some businesses, getting the accountants and
getting the figures done is important, but much more important
is whether you're going to actually capture the public's imagination
and get them to use your products.
At what stage were you able to see the
big picture for the Virgin group? Did you seriously believe in
the beginning that you could be at the helm of a billion-dollar
operation?
We never had a grand plan, we never thought:
"Let's try to build the most respected brand in the world."
Now we've started thinking about that, but we never did earlier.
The turning point might have been when 10 years ago a magazine
in Britain wrote a huge editorial on the Virgin Brand, about what
an incredible, strong consumer brand we had. That's when it struck
us: "Hey, we got a great brand." Since then, we've taken
it (the brand) much more seriously, and we've used it...
And overused it too?
Ever since I was 20 I've read articles saying
things like "Will Branson's Balloon Burst?" or something
to that effect. We are a way-of-life brand, whereas all the other
famous brands specialise in one area-soft drinks, computers, whatever.
But you've also had some spectacular failures-cola,
vodka, PCs...
We've had things that haven't worked out as
well as we would have liked them to. Virgin Cola still has a presence
in 50 countries, is profitable, but it still hasn't toppled Coca-Cola.
Actually for about 18 months we started believing we could topple
Coca-Cola because Virgin Cola exploded in the UK, and for about
18 months Coca-Cola didn't take us seriously. Then, an Englishwoman
working in Atlanta met the president of Coke, and said: "Look,
the Virgin brand just could catch on like wild fire all over the
world, and you've got to send me to England with a SWOT team to
swat Virgin Cola." She arrived in England, and people like
Tesco's, for whom 60 per cent of (cola) sales were of Virgin Cola,
suddenly started getting the most fantastic deals from Coke-it
was a bit like what British Airways did to us (Virgin Atlantic).
Coke then attacked back in a major way... I only know about this
because this woman is now my bank manager, and she told me about
it!
If you set up 200-300 businesses from scratch,
some will work, some will not work so well, and if you're frightened
of failure, you're not going to set up anything. Fortunately,
most of our businesses have worked, and we've never lost major
sums of money on any failures.
You also don't have much faith in the
way stock markets work, having once decided to buy back shares
you listed...
We will list individual companies; we just
won't list our top company. It's quite restricting... if I had
been a listed company, shareholders would have thought we're completely
mad to go from the Sex Pistols (one of the rock groups signed
on by Virgin Records in the 1970s) to Virgin Atlantic; from Virgin
Atlantic to trains; or from trains to mobile phones. One problem
with the stock markets is that you have analysts who specialise
in mobile phones, or in transport, or in drinks, and a lot of
things. But you don't have analysts who specialise in...
The Sex Pistols?
Yea, the Sex Pistols, or a number of our other
businesses. So the value of our company would not get fully reflected.
Besides, it also wouldn't be as much fun. I can decide alone today
to go into space, and invest $100 million (Rs 440 crore) in building
five spaceships. As a public company, I might have had some interesting
looks from shareholders!
The music industry has changed quite a
bit since the 1970s...
If you own a record company, you should do
very well because you can get royalties back from iPods, mp3 players,
downloads, etc., and people are now willing to pay for that. Music
shops is much tougher. We still have music shops... we've used
them to break our other businesses like mobile phones and so on.
We still think it's worth having them, but I wouldn't recommend
people set up music shops today.
Are you glad you sold Virgin Records when
you did (in 1992 to Thorn EMI for $1 billion to pay for his airlines
venture)?
We still have v2 Records, but it's different
now. When we had Virgin Records I was really involved. Now I've
invested in other people looking after the music business. We
had to sell Virgin Records to fund the airline... sometimes you've
got to move on. As far as music goes, it is different today, but
I am not in touch to be able to say that music was more exciting
when I was younger.
There have been reports that you've eased
up on partying...
We still party hard. It's important for the
staff-it's a Virgin tradition. I've brought my son along this
time (to India). He can do some of the partying for me.
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